Bank of Japan rate hikes and monetary policy 2026
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Japan's prime minister says policies will boost confidence in yen after US intervention falls short
FX strategists at OCBC Group Research said the yen's cheap valuation has done little to ease depreciation pressures.
A joint U.S.-Japan intervention and the Bank of Japan's 25 basis point September rate hike made the yen the G10's top-performing currency in the third quarter, adding 3.3% against the dollar, according to Deutsche Bank data.
The yen's weakness has pushed up Japanese import costs and broader inflation.
Bank of Japan raises interest rates to 31-year high of 1.25%
The BOJ started monetary policy normalization in March 2024.
The Bank of Japan raised its policy rate by 25 basis points to 1.25%.
The BOJ said the rate hike was because of a risk that inflation will deviate upward beyond its 2% target.
Japan raises interest rate to 31-year high
The BOJ's decision to hike rates was split 7-2, with board members Toichiro Asada and Ayano Sato dissenting.
After the rate hike, the Nikkei 225 gained 1.5%.
After the rate hike, the yen weakened past 157 against the dollar.
Japan's corporate leaders raise alarm over weak yen
Takayuki Ueda, president and CEO of Inpex, said that yen at 100 would be the appropriate level for the Japanese economy.
Yoshinori Kanehana, chairman of Kawasaki Heavy Industries, said that yen at 150 could make him consider moving manufacturing from the U.S. to Japan.
Kawasaki Heavy Industries has 27 production sites outside of Japan and 17 at home, according to a company report published last year.
“we had some concern that the [weak yen] would create a confused situation in the financial market,”
BOJ expected to hike rates 25 basis points to three-decade high
Carlos Casanova, senior economist for Asia at UBP, expects the BOJ to stand pat.
Japan's real wages rose 2.4% in July, rising for the seventh month in a row.
Japan's headline inflation rate for July was 1.9%.